UK-based insurer Standard Life has sought to counter speculation it might seek to pull out of its remaining two Asian markets, saying it is looking to revitalise its business by focusing on affluent clients in Hong Kong and mainland China.

But that plan will be put to the test this year amid weak sales prospects for investment-linked assurance scheme (Ilas) products, which are hybrids with both an insurance and investment element.

Revenue premiums of life and annuity (linked) in-force business decreased 16% to $31.4 billion in the first three quarters of 2015, according to Hong Kong's Office of the Commissioner of Insurance. New office premiums for life and annuity (linked) new business fell 26% to $8.8 billion over the period.

Industry observers called into question Standard Life's commitment following the closure of its operations in Singapore last year, and Dubai/Middle East in 2014.

The firm is now in only two markets in Asia: Hong Kong as a wholly-owned firm predominantly selling Ilas products through independent financial advisers (IFAs); and China via a joint venture that distributes life and unit-linked products.

But Sean Deehan, head of strategy and business development at Standard Life Asia, told AsianInvestor: “We have a clear plan and we are developing a broader strategy on our business in Hong Kong and the mainland.

"We are very committed to the Hong Kong market. We see real opportunities as Hong Kong and the mainland have started to integrate."

Asked to explain what opportunties he saw, Deehan pointed to Hong Kong acting as a channel for overseas investments as China opens up, without being more specific.

He said companies that it sees opportunities to work with included mainland wealth management firms such as Noah Holdings and Jupai Holdings, in which private bank Julius Baer recently acquired a stake. Deehan did not say if his firm had discussed potential distribution arrangements with these firms.

Standard Life has always relied on IFAs as a distribution channel for its Ilas products. It attempted to work with retail banks last year, but failed, as reported.

But like all insurers that sell Ilas products in Hong Kong, Standard Life has been impacted by GN15, a guidance note issued by the city's insurance regulator that took effect January 1, 2015.

Designed to reduce aggressive selling or mis-selling of Ilas, GN15 banned indemnity or upfront commission payments. As a consequence, old Ilas products had to be closed to new subscribers and insurers have had to develop new products to comply with the new rules.

Standard Life noted that it devoted last year to revamping its product proposition on account of GN15. It launched two new Ilas products as a result to target affluent Hong Kong and mainland Chinese clientele with $1 million in investable assets, a shift from the mass market it previously focused on.

“We moved away from regular Ilas to premium," explained Deehan. "The underlying investment remains the same but premium Ilas has a different charging and commission structure."

He noted that the key difference for premium Ilas was that the minimum investment was higher and  paid in a lump sum. With regular Ilas, the minimum investment is smaller but is an ongoing commitment.

Deehan declined to reveal flows into its two new Ilas products. However, one IFA executive based in Hong Kong confirmed that investors had not been buying Ilas in recent months in light of equity market turbulence.

Raj Juta, insurance sector leader at Deloitte Southeast Asia, supported that, saying insurers faced challenges when selling Ilas in Asia due to the macroeconomic uncertainty, which is creating volatility in financial markets and impacting consumer confidence.

“The complexity often attributed to Ilas business also means it can be acutely impacted by this uncertainty as consumers find it more difficult to fully understand the benefits and risks associated with these type of products,” he noted.

But Juta added that many of the fundamental conditions for Ilas growth remain in Asia, as long as providers were able to articulate the long-term value of these products.